Real Estate Information Archive


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Fed Keeps Rates Near Zero, Mortgage Rates Fall

by Tim Hart

In light of the Federal Reserve’s decision to not raise the Federal funds rate, mortgage rates for a 30 year fixed rate mortgage fell to 3.86 percent this week.

The Federal Reserve continued to hold off on raising their interest rates, choosing to keep rates close to zero percent. The Fed attributed their lack of action to the lack of global growth that could potentially slow the domestic economy as well as the fact that inflation in the US remains subdued. The Fed committee also wanted to see additional evidence from the labor market to make sure it has and continues to improve.

The Fed made their decision 9-1 but they will meet again in late October and mid December. During those meetings, the Fed will once again decide on whether to raise rates. The Fed still plans on raising interest rates by the end of the year, but they have also said this for several previous years.

Currently, the Federal Reserve’s long-term goal is to have rates at or close to 3.5% by 2018.

Home buyers looking for a home loan will love the news that the Federal Reserve has not raised their rates as of yet. Mortgage rates are directly affected by the Federal Reserve rates and rise accordingly. Rates have stayed below 4% for 9 straight weeks. So long as the Fed does not raise rates, great financing opportunities still exist for buyers that might not be seen for some time. Having the Fed raise rates shows their confidence in overall economy, but from an individual buyer’s perspective, now is the time to lock in a great rate for the next 15 or 30 years.



Refinancing Drives Mortgage Application Increase

by Tim Hart

Homeowner’s looked to take advantage of low mortgage rates in late August and their attempts to refinance their loan helped raise total mortgage applications by 3.6 percent. Mortgage applications were 18% over numbers seen from a year ago.

As rates have dropped, homeowners have tried to take advantage and lock in low interest rates. According to CNN, turbulence in China caused these lower rates, allowing US homeowners a great opportunity to refinance. Refinancers surged over the week of the 16th, having 7% more applications than the week before – a large shift for an entire country.

The more mortgage activity, the better off the United States Housing Market will be. Widening the market by adding both additional buyers and sellers will help make the market less volatile. Although homebuyer confidence has been fast improving, most of this recent surge was thanks to refinancers. Ideally, lenders will see a consistent growth rate in mortgage applications, with a good mix of both homeowners and homebuyers.





Mortgage Rates Still Below 4%

by Tim Hart

After a volatile July, loan interest rates have stayed below 4% for the 5th consecutive week. This week, the 30-year fixed-rate mortgage averaged 3.93%, just a tick below last week’s 3.94% average. Movement has been relatively small over this time period, but buyers will want to stay in the loop should rates trend upwards again.

Housing markets across the US have responded well to the low rates as home buyers have tried to lock down favorable rates while many homeowners have tried to refinance. All year, lenders have tried to keep rates low to keep attracting prospective buyers but they have been steadily creeping from the low 3’s to high 3’s(see January, March and April numbers here).

Fifteen-year mortgage rates averaged 3.15% this week—down from 3.17% last week.



Both mortgage rates and loan applications have seen big up and down swings over the first few weeks of July.

Earlier in the month, mortgage interest rates fell and continued to be on a downward trend. On July 10th, the rates fell to 4.04 percent. However, the past weeks since then have given a sense that mortgage rates may once again be trending up. This week, mortgage rates hit their highest level since October of 2014—hitting 4.09% this week. For now, its clear that at the very least, mortgage rates have been volatile and should be watched closely over the follow weeks to get a better sense of where they may be heading.

According to the sources listed below, events and turmoil in both China and Greece directly affected yields on US Treasury Securities. Rates rose during this time, but the Fed may still hold back from raising interest rates in light of turmoil abroad.

Mortgage applications have also been volatile as buyers have mirrored interest rates closesly. In a July 8th article, mortgage applications had risen 4.6% on a seasonally adjusted basis but by July 10th, those numbers had already fallen by 1.9% again. On the bright side, although the numbers may be volatile in 2015, total mortgage volume still remains 22% higher than a year ago and total home purchase volume is up by 17 percent.

Any buyer looking at homes right now will want to keep a good watch over mortgage rates so s/he can take advantage of the lowest available rates. They seem to be moving up and down quickly—so buyers will want to make sure they don’t settle for a loan with higher rates than average.






Retirees Keeping Their Mortgages in Higher Numbers

by Tim Hart

Some retirees are opting to keep their mortgages instead of using their retirement funds to cash out and have full ownership over their home. Why? Well for now, stock market returns and low interest mortgage rates might make it more financially advantageous for a retiree to keep their money in these investments. More often than not in the past, retirees with an active loan would use a piece of their retirement plan to pay off their premium no longer owe anything on their home.

However, with high capital returns from the stocks and bond market, coupled with the fact that mortgage rates are some of the lowest seen in history, investment returns from other markets have actually been greater for many even with their mortgage payments subtracted out.

Improved health care and life expectancy has also affected this trend. Where many retirees preferred a low risk investment in the past, a lot of people now potentially see decades of life ahead of them and are still willing to take some financial risks.

Interestingly, 64% of retirees said they would also probably move at least once after retirement. Assuming it’s not an all cash deal, many of these retirees would be applying for another mortgage post retirement. Not only that, 30% of them actually said they would be looking for a larger home, rather than downsizing.

As mortgage rates rise, this financial path’s viability will need to be re-evaluated. The stock market does hold more volatility and risk—so even in a positive market like this, there is no guarantee of reward. However, more retirees have gone through this process, evaluated their financial situation and chosen to incorporate more risk—showing a marked shift in how many people have been approaching their retirement of late.




Mortgage Rates Hit 20 Month Low

by Tim Hart

Freddie Mac announced the average rate for a 30-year conventional loan fell to 3.73% this week. The average rate fell from last week’s number of 3.87% and from 3.89% in later December, thanks to another strong week for the domestic economy, especially in comparison to continued financial struggles in Europe and Asia.

The average rate for a 15 year fixed loan also fell this week to 3.05 percent--down from 3.15 percent. 15 year mortgages are most popular with those looking to refinance and the low rates should be noted by anyone paying a 30 year fixed rate mortgage. Many homeowners have a great opportunity to save on their mortgage.

Both mortgage rates fell due to a strong outlook on the domestic economy. Unemployment benefit requests declined this week and wages continue to see improvement. As the Holidays seemed to prove, consumer confidence has also greatly increased in the US.

As investment in Europe and Asia has struggled, many investors are turning towards purchasing government bonds and securities. Yields on securities issued by Freddie Mac and Fannie Mae have fallen recently, perhaps due to their current demand. These securities encompass around 60% of all US mortgages. Bond investors have accepted lower yields on these securities, allowing mortgage bankers to charge lower interest rates to their customers.

Banks have also been trying to attract milennial first time home buyers to the market, who, as of yet, have not been buying up homes like previous generations.

Again, great news for home buyers, home owners and refinancers. Interest rates really add up over the life of a loan, so this kind of adjustment can really benefit buyers years down the line. Coupled with lower mortgage insurance rates, many home buyers who were not eligible even a month ago, may now be approved for a loan.



FHA Lowering Mortgage Insurance Rates

by Tim Hart

The Federal Housing Administration announced that it will lower the cost of its mortgage insurance for potential borrowers. The White House released a statement that they will lower the mortgage insurance rates from 1.35% of the loan’s value, down to 0.85 percent. Mortgage insurance is designed to keep lenders safe whenever a borrower defaults on their loan.

The change to the mortgage insurance rates could save a first-time homebuyer $900 a year on their payments. For a lot of buyers sitting on the fence, this may be the starting gun for which they were waiting. The White House believes that more than 250,000 additional, potential home buyers will now be able to purchase a home and stay within their means. Homeowners who already have an FHA loan will have the opportunity to refinance and also see similar savings.

The FHA had raised mortgage insurance after the 2008 recession. However, rising home values, a larger, wealthier workforce, and declining foreclosure numbers gave them the confidence to let off slightly on the reins of the housing market.

How many buyers will be enticed into buying is yet to be seen, but anyone looking for or has an FHA loan should discuss the changes with their lender and see what potential savings could be had.



Mortgage Rates Hit New Low for 2014

by Tim Hart

Mortgage Rates hit a new yearly low for 2014, a positive sign for potential home buyers. With the year fast coming to a close, this is the lowest mortgage rate seen in quite some time. Mortgage rates hit 3.89% for a 30-year fixed-rate mortgage, the lowest since May 2013.

Rates dipped amid lower than expected home sales. Demand seems to be holding steady but would have been better if not for lagging wage growth.

The 15 year fixed-rate mortgage also dipped to 3.1%, close to numbers seen in late October.

Despite lower rates, applications were down 7.3%. For home-buyers who may not have been able to afford or qualify for a home mortgage, or had held off for other reasons, now may be the time to re-evaluate how the drop in rates may affect them.


Fannie Mae, Freddie Mac Announce 3% Down Payment Loan

by Tim Hart


The Federal Housing Finance Agency announced its attempt to better increase mortgage credit availability to US borrowers in October. Now, with the recent announcement of a 3% Down Payment loan by both Fannie Mae and Freddie Mac, it seems the FHFA’s efforts have paid off.

Both Fannie Mae and Freddie Mac announced new 97 loan-to-value mortgages that will be available to first time homeowners. The new loans help credit-worthy borrowers without capital get a home loan. The loan should help buyers who want to own a home and can afford monthly payments but cannot pay for the down payment and closing costs.

Both Fannie Mae and Freddie Mac don’t foresee the loan becoming a major part of their business. The loans target a very specific borrower in their eyes and the loan will be awarded with this specificity in mind. With that being said, the loan should appeal to a lot of millenials, who as of yet, have not been buying up real estate like previous generations. Many economists have predicted millenials becoming major players in the real estate world in the coming years and steps like the one taken by the FHFA to broaden credit requirements should help bring these buyers to the table.

For those first time homebuyers who wanted a home, but until now did not have enough capital to put down, now may be the time for them to re-engage their lender and see if a 3% down payment is a feasible alternative to a standard 30 year fixed rate mortgage.




Fifteen-Year Fixed-Rate Mortgage Hits Lowest Since 2013

by Tim Hart

For homebuyers looking to refinance their mortgage, great news came surrounding 15 year mortgage interest rates. The average rate for a 15 year fixed-rate mortgage dropped to 3.08%, the lowest level since June of 2013. The rate fell by 0.1 percent compared to last week and has dropped significantly compared to the 3.36% that it started at earlier in the month. Rates on 30 year loans also dipped 0.05% and has dipped below 4 % for the first time since June 2013.

With a struggling economy, investors have avoided investing overseas and instead have turned to government bonds and mortgage-backed securities, lowering interest rates.

Homeowners with recent mortgages can refinance their thirty-year loan for the 15 year loan, at its current rate. Homeowners should be aware that their payments will not go down in a refinance and in general they will almost always go up. According to CNN money, for anyone with a mortgage balance of $200,000, they can expect to pay about $340 a month more than in a 30-year mortgage. However, instead of making a $1075 payment for 25 more years, they could instead pay $1,423 over 15 years. A homeowner could potentially save $137,000 in interest over the lifetime of the loan.


Displaying blog entries 1-10 of 19